SBA Loans Total Millions

The federal government has given more than $24 million to travel
agents nationwide to assuage economic damage caused by the 9/11
terrorist attacks and the impact of vast changes in the industry.

The emergency loans, made through the Small Business
Administration, have helped save at least 500 travel agency
businesses from bankruptcy since 9/11, according to the American
Society of Travel Agents.

“We are very proud of this because after Sept. 11, travel agents
had nowhere to go for working capital with reasonable rates,” said
Barbara O’Hara, ASTA’s vice president for government affairs.

More than 130 travel agencies in Western states received a total
of $6.9 million, with California agencies receiving the most
funding -- $3.2 million, or about half of the total.

Florida agencies received the most federal assistance, with
loans totaling about $3.4 million.

Overall, travel agencies received about 4 percent of all the SBA
disaster-relief loans granted since Sept. 11.

The average loan for agencies was about $51,000.

The federal funding totals highlight how hard the 9/11 attacks
affected the travel agent industry, already struggling from the end
of airline commissions and new technology that has dramatically
altered the way travel is bought and sold.

In testimony given in April before a Congressional committee on
commerce and trade, Paul Ruden, vice president of legal affairs for
ASTA, said an SBA decision to expand the national emergency loan
program was a “bright light” for travel agents during an otherwise
dismal period in the industry.

Travel agencies first received aid from an expanded national
emergency loan program designed to help small businesses affected
by the terrorist attacks. When applying for the emergency loans,
travel agencies were required to show how they were affected by
federal actions that prevented the flow of travel following the
attacks, such as the two days that the Federal Aviation
Administration shut down air traffic.

ASTA has estimated the loss of travel agency commissions and
fees during the four weeks following the attacks to be roughly
$1.36 billion. Total losses and operating costs through December
2002 is estimated to be $14.4 billion. More than 300 emergency
loans totaling about $13 million were approved after 9/11 for
travel agencies that had annual revenues of less than $1 million.
“When they opened up the disaster relief nationwide, we were
ecstatic,” O’Hara said. “Then we started getting phone calls from
our members that the size standard prevented them from getting
loans.”

Industry figures have shown that many struggling agencies
exceeded the $1 million cap, and many were at risk of closing.

Though the SBA had been reviewing the travel agency industry
before 9/11 and was considering a change in the size standard, the
attacks accelerated the process.

In testimony given to a Congressional small business committee
in February 2002, a travel industry representative cited a 1998
Harris Poll showing that the number of travel agencies with annual
revenues of more than $2 million had increased by 46 percent since
1995.

During the same period, agencies with revenues of less than $1
million had decreased by 35 percent.

Fifteen days after the hearings, the SBA increased the size
standard to $3 million.

As a result of the new standard, the SBA approved 147 loans to
agencies between March and September 2002, for a total of $10.9
million.

It also channeled $1.4 million more to travel agencies than had
been issued in the previous year and provided assistance to an
additional 29 agencies.